Projects with capital rationing using profitability index

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Reference no: EM132005983

1. Analyze ROA and ROE. What are their components? Talk on all the issues, which can alter the components of those metrics. If those metrics are not definitive, what other metric is? Elaborate.

2. What is the rule for choosing projects with capital rationing using profitability index? How are net present value and inital rate of return related?

3. Elaborate on risk. Distinguish between systematic and unsystematic risk and the factors influencing Beta. What are the values of betas for bonds. Why? Compare them to betas of common stocks.

Reference no: EM132005983

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